By KATHY GEORGE, SEATTLE POST-INTELLIGENCER REPORTER

Published 10:00 pm, Sunday, November 30, 2003

The Unocal oil company is about to become the first corporation in history to stand trial in the United States over human rights violations abroad.

And two Seattle law professors are helping to make history in the shocking case, in which corporate partners used Myanmar's notoriously brutal military regime to provide "security" for a natural gas pipeline project in the remote Yadana region near the Thai border.

The long-delayed trial starting next week in California will determine whether Unocal, a major investor in the project, is legally responsible for the military's abuse of villagers living along the pipeline route.

It's a case involving allegations of forced labor, rape, torture -- even killing. But mainly it's about corporate responsibility and how far it reaches beyond American soil and beyond corporate walls separating subsidiaries from parent companies.

Lawyers for the villagers hired Testy, an expert in corporate formation, to help knock down the walls between California-based Unocal and the two subsidiaries that it set up to hold its 28 percent interest in the pipeline project in Myanmar.

"Our argument is that these are phony corporations created solely to hide from liability," said Dan Stormer of Pasadena, Calif., the lead attorney for the Myanmar villagers.

"Kellye Testy is a nationally renowned expert on the formation and makeup of corporations and their legitimacy," he said. "She is among our most important witnesses."

Shapiro is an expert in the procedural rules that control lawsuits, including who can be sued where. She has been an attorney of record in the Unocal case from its beginning in 1996.

It's not easy representing a group of impoverished people who live thousands of miles away in Myanmar, formerly called Burma, against powerful corporations based in California and France.

The foot-high stacks of records in Shapiro's campus office attest to the daunting nature of the case.

"I had no idea how complicated it really would get," said Shapiro, who volunteered to help because she wanted to make a difference and because her longtime friend, Philadelphia attorney Judith Chomsky, is involved.

Testy, as a witness, could not talk about her role except to say, "It is a very complex and interesting case."

The allegations are horrific.

With Unocal's knowledge, the Myanmar military government formed four battalions, each with 600 men, to "guard" the pipeline corridor during construction, according to a 9th U.S. Circuit Court of Appeals opinion on preliminary motions in the case.

But the center of Myanmar's civil war was at least 150 miles away from the corridor, where "little or no rebel activity" was occurring, the opinion said.

The soldiers' true role was to force villagers in the pipeline region to work without pay -- a modern form of slavery, the 9th Circuit opinion said.

And Unocal knew, both before and after investing in the project, that the military was enslaving the people, the opinion said.

Unocal's own consultant, former military attache John Haseman, reported to Unocal in December 1995 that the soldiers were committing "egregious human rights violations" along the pipeline route.

"The most common are forced relocation without compensation of families from land near/along the pipeline route, forced labor to work on infrastructure projects supporting the pipeline ... and imprisonment and/or execution by the army of those opposing such actions," Haseman told Unocal in a report quoted in court records.

Two groups of villagers from the region filed separate suits in federal and state courts in California, alleging violations of the federal Alien Tort Claims Act and state law. The villagers are not named, to protect them from military retribution, Stormer said.

The suits claim that, because of the pipeline project, the villagers lost their homes, their family members were killed, and they were raped, assaulted, tortured or forced into slavery.

Their suit, said attorney Stormer, "will prevent corporations from exploiting local peoples in the name of profit."

Unocal calls the allegations false and insists in a written statement, "This company has never encouraged, participated in human rights violations in any way. ... We will defend our reputation vigorously and expect to be fully vindicated."

Unocal has won some important victories. This year, it persuaded the 9th Circuit to reconsider its opinion that there is enough evidence to try Unocal for aiding and abetting the forced labor. That reconsideration is pending.

Also, a Los Angeles County Superior Court judge ruled last year that Unocal is not directly liable for human rights abuses in Myanmar, although it may be vicariously liable -- the subject of the upcoming trial.

Unocal, with $11 billion in assets, is primarily involved in exploring and producing crude oil and natural gas around the world.

Shapiro's work focused not on Unocal but on a French oil company, Total, the pipeline project operator.

"You have to find a connection between the defendant and the place where you want to sue them," Shapiro said.

Although Total was "equally complicit" with Unocal in the human rights violations, she said, she could not establish enough of a link to California to haul the French company into court there.

Total set up a subsidiary to extract natural gas from the Yadana field and to build a pipeline for shipping the gas to Thailand.

It was Total that sold an interest in the project to Unocal. And it was Total's subsidiary that contracted with the Myanmar government to provide security protection, the 9th Circuit opinion said.

Although disappointed that Total avoided the suit, Shapiro said the preliminary rulings that Unocal can be sued are of greater importance.

"The U.S. really has an extraordinary legal system. It offers in many ways a real possibility to level the playing field" between poor villagers and large corporations, she said.

Even if Unocal ultimately wins, "the corporation has to answer in a specific and concrete way" for its actions, she said.

"It is enormously important that a case has actually been brought this far."